Cytec completes buy of UCB's Surface Specialties business, reorganizes

March 2, 2005
Cytec Industries Inc. finalized its purchase of UCB's surface specialties business, a transaction worth over $1.8 billion. With the deal, Cytec agreed to divest Surface Specialties' amino resin product line and use the proceeds to reduce debt. The company also reorganized the business to operate Cytec Surface Specialities as a separate segment...

WEST PATERSON, NJ, March 1, 2005 (BUSINESS WIRE) -- Cytec Industries Inc. finalized its purchase of UCB's surface specialties business.

The transaction is worth more than $1.8 billion, of which over $1.5 billion was paid in cash and the balance was paid in shares of Cytec common stock. The deal also includes a contingent consideration, pending achievement of certain operating results, of up to a maximum $65.6 million [EUR 50 million], of which $26.24 million [EUR 20 million] was paid up front with the balance payable in 2006.

UCB now owns about 12.5% of the outstanding shares of Cytec, and has entered into a stockholders agreement which provides for UCB to reduce its stake within 5 years, and contains other customary terms and conditions. The cash portion of the acquisition cost was financed utilizing the credit facilities recently announced by the Company.

In conjunction with this transaction, Cytec has agreed to divest Surface Specialties' amino resin product line during 2005, and to use the proceeds to reduce debt. Sales of Surface Specialties' amino resin product line in 2004 were about EUR 123 million.

David Lilley, chairman, president and CEO also announced a redesigned organizational structure. "Cytec will operate the acquired Surface Specialties business as a separate segment, and will integrate the existing Coating and Performance Chemicals product lines into this new segment, which will be headquartered in Brussels, Belgium."

Ben Van Assche, formerly director-general of Surface Specialties, has been named president of Cytec Surface Specialties and will be elected an officer of Cytec and a member of the executive committee. The remaining two product lines in Cytec's Performance Products segment, Polymer Additives and Specialty Additives, will be combined with the Water and Industrial Process segment. This specialty chemicals segment, which includes the Water Treatment, Mining, and Phosphine Chemicals product lines and now the Polymer Additives and Specialty Additives product lines, will be renamed Cytec Performance Specialties, and will continue to be based at Cytec's corporate headquarters in West Paterson, N.J., with Shane Fleming as president. In addition, Cytec's Specialty Materials segment has been renamed Cytec Engineered Materials and will continue to be led by Steven Speak, president of Cytec Engineered Materials, and maintain its headquarters in Tempe, Ariz. Cytec's other segment, Building Block Chemicals, is unchanged and will continue to be headquartered at Fortier, La., with Jas Gill as president.

Lilley concluded, "Similar to Cytec, Surface Specialties has very capable and talented employees with a clear emphasis on providing customers with value-added services, and we enthusiastically welcome them to Cytec. We are excited about the possibilities for further enhancing shareholder returns going forward."

As recently communicated by UCB, preliminary results in 2004 for the business to be acquired had sales and EBITDA (earnings before interest, taxes, depreciation and amortization), prepared in accordance with accounting principles generally accepted in Belgium, of EUR 1.112 billion ($1.468 billion) and EUR 147 million ($194 million), respectively. Sales and EBITDA for Surface Specialties for the year ended 2003 were EUR 1.0 billion and EUR 125 million, respectively. The indicated EBITDA excludes certain corporate expenses to be retained by UCB and certain items of a non-recurring nature. Cytec expects to provide additional details on Surface Specialties' financial results for 2004 as well as 2005 earnings estimates for the combined company during its first quarter earnings conference call in early May of this year.

Cytec Industries ( is a specialty chemicals and materials technology company with pro forma sales in 2004, including the Surface Specialties acquisition, of about $3.0 billion. Its growth strategies are based on developing technologically advanced customer solutions for global markets including: aerospace, coatings, mining, plastics and water treatment.


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